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ABP and PGGM upbeat but Staatsen looms

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NETHERLANDS – ABP and PGGM, the two largest Dutch pension funds, have posted positive returns – though the potential costs of the Staatsen review could run into billions of euros.

Civil service fund Stichting Pensioenfonds ABP reported a 4.3% return, taking its coverage ratio to 112% from 109%. Its capital value now stands at 156 billion euros, from 150 billion euros.

The fund’s finance director Dick Sluimers said in a statement that he was satisfied with the continued financial recovery in the quarter. He said ABP was now going forward on schedule with its stated recovery plan, though he said he was worried by the decline in real interest rates.

“Because of this there is little to say at this moment about a return to complete indexation and about the level of future pension contributions.”

Health care and social workers fund PGGM returned 3.4% in the period. “All asset categories, particularly equities (3.8%) and commodities (10.3%), made a positive contribution,” the fund said. Its capital has risen to 54.9 billion euros from 52.9 billion euros.

“Helped by low money-market interest rates around the world and tentative growth in corporate profits, all investment categories generate a positive return,” said chief investment officer Roderick Munsters.

The fund said it is “striving” to preserve its investment freedom, under political threat following the Staatsen report into pension funds’ commercial activities. “Restricting this freedom,” Munsters said, “would mean lower returns. To compensate for this loss of revenue, pension contributions in the Netherlands might have to increase by approximately two billion euros.”

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